US Investor Roadshow Presentation - Coca-Cola Amatil

Canada - US Roadshow
Meetings
Terry Davis
Group Managing Director
John Wartig
Chief Financial Officer
September 2007
1
Coca-Cola Amatil
Consistent
Out-performance
2
1

Target: Consistent achievement of double-digit earnings
growth
CCA has consistently delivered on its operating target of
double-digit earnings growth:
– 8 out of 11 halves since 2002
– First half 2007 1
EBIT growth of 13.3%
NOPAT growth of 10.7%
1. Pre-significant items
3
Strong delivery of sales and margin
Sales & EBIT % 1
$m
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
16%
14%
12%
10%
8%
6%
4%
2%
EBIT CAGR of +9.3%
2001 – 2006
H107 EBIT margin of
13.2%
H107 revenue growth of
5.1% on pcp
H107 EBIT growth of
13.3% on pcp
-
0%
2001
2002
2003
2004
2005
2006
H107
Trading revenue EBIT %
1. before significant items
4
2

Strong delivery of EPS and dividend growth
Earnings per share 1
Dividends per share
43.3c 43.2c
31.5c 32.5c 15.5c
39.0c
28.0c
25.3c
29.2c
34.3c
18.5c
23.0c
21.4c
14.0c
2001 2002 2003 2004 2005 2006 2007
2001 2002 2003 2004 2005 2006 2007
EPS CAGR of
+11.3% since 2001
DPS CAGR of
+18.3% since 2001
First half 2007 EPS 1 up 10.3% to 21.4 cps with DPS up 6.9% to 15.5 cps
1. before significant items
5
2001 Target - To achieve a broader based and better
balanced geographic and product mix
Geographic Mix - 2006
Revenue Mix
Revenue
$4.3bn
16%
EBIT
$580.5m
10% 8%
3%
11%
11%
Capital
Employed
$3.6bn
3%
23%
7%
5%
10%
23%
Food
Non-carbonated
beverages
10%
19%
53%
75%
11%
40%
95% 67%
Carbonated
beverages
Food - SPCA
Beverages - Indonesia & PNG
Beverages - South Korea
Beverages - NZ & Fiji
Beverages - Australia
2001 HY07
6
3

2007 Outcome - A broader based, better balanced, more
profitable mix
2001 – Low levels of product innovation and over
reliance on CSDs to generate growth
- 95% CSDs
- 5% Non-carbonated beverages
HY2007 – A broader based, better balanced and more
profitable business mix
- 67% CSDs
- 33% Non-carbonated beverages & food
Graphs represent revenue split
7
Product Innovation continues to drive growth
140
Product launches
120
100
80
60
40
20
0
2001 2002 2003 2004 2005 2006 2007
1. Excludes Maxxium range
2. 2007 full year estimate
8
4

CCA share price & peer group versus the all ords
160
150
140
CCL
FGL
All Ords
LNN
130
120
110
100
90
Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07
CCA consistently outperformed the All-ords, FGL and LNN over the 12
months to August 2007
9
Coca-Cola Amatil
2007 Strategic Review
Outcomes
10
5

2007 Strategic review fundamentals
Primary outcomes
Grow CCA’s share of non-alcoholic beverages by
continuing to expand the product portfolio
Broaden the beverage portfolio into the highly profitable
alcoholic beverages market in Australia and New Zealand
Complete the sale of the South Korean business (Q407)
Prioritise growth in the developing markets of Indonesia,
PNG and Fiji
Undertake a major IT infrastructure development to reengineer
business processes and create a world class
operating system (Project ‘OAisys’)
11
The six key business drivers that differentiate CCA
Market share, profit growth and brand premium driven by
Accelerated product & package innovation
High growth non-carbonated beverage and food expansion
Expand product availability through additional cold drink
equipment placements and new outlet development
Enhance technology capability to deliver levels of customer
service that cannot be profitably matched by CCA’s
competitors
Revenue management focus and cost discipline
Develop a material presence in premium alcoholic
beverages in Australia and New Zealand
12
6

What could CCA look like in five years
“ A beverage choice for every occasion”
CSDs continue to dominate the brand portfolio but will
represent a lower % of Group earnings
Non-sugar CSDs expected to represent >40% of CSD
volume
Non-CSDs, alcoholic beverages and food to generate
> 50% of future earnings growth
Asset allocation, including acquisition and organic
growth, will be concentrated in Australia and New
Zealand, where CCA’s competitive advantage is
greatest
13
Coca-Cola Amatil
HY07 Results
Review
14
7

Major highlights of the HY07 result
1. Group EBIT 13.3% to $284.5 million
A record first half result for CCA
Strong performance by all beverage businesses, except South Korea
which continued to recover lost volume from extortion attempt
2. Return on capital employed 1.2% to 17.2%
Driven by earnings growth and continued investment in customer
service & product and package innovation
3. Material improvement in Indonesian performance
Strong volume & revenue growth delivers four-fold increase in earnings
4. COGS recovery
Price realisation & mix improvement enabled full beverage COGS
recovery 1
1. Excluding South Korea
15
Group results summary
Trading revenue
Beverage revenue per unit case
EBIT 1
NOPAT 1
ROCE
Strong free cash flow
Earnings per share 1
Dividend per share
5.1% to $2.16 bn
4.2% to $6.50 puc
13.3% to $284.5 m
10.7% to $160.9 m
1.2 pts to 17.2%
$79.6 m
10.3% to 21.4 cps
6.9% to 15.5 cps
1. Before significant items
16
8

Australia
A$m
HY07
HY06
% Chg
Trading revenue
1,133.0
1,043.4
8.6%
Revenue per unit case
$7.49
$6.96
7.6%
Volume (million unit cases)
151.3
149.9
1.0%
EBIT
199.1
185.8
7.2%
EBIT margin
17.6%
17.8%
(0.2 pts)
Capital expenditure / revenue
5.2%
0.5%
4.7 pts
(Based on new segment reporting)
17
Brand Coca-Cola share powers ahead in Australia
KEY FACTS
Broadly held volume in first half 2007, cycling
2006 Coke Zero launch
Further increase in market share and price gap
Total Cola category market share increased by
2.1% to approximately 80% 1
Increased retail price gap to Pepsi by 10% 2
Achieved by continued investment in product and
package innovation in the Coke trademark
1. AC Nielsen Australia ScanTrack, YTD May 07
2. AC Nielsen Australia ScanTrack, YTD July07
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9

Product & package ‘premiumisation’ fuels earnings growth
Higher value and higher priced premium products & packages
Water
Mount Franklin & Pump combined volume up by 13%
Mount Franklin market share up by 5% to 42% 1
Powerade
Powerade market share up by 4% to over 53% 1
2007 Rugby World Cup sponsorship
Package innovation drives mix improvement
Coca-Cola in 385ml glass and slim line cans
1. Nielsen combined database, 13/05/07
19
Australia – New products drive earnings growth
Kirks
Premium mixers re-launched
Sugar-Free launched as health & wellbeing offering
Achieved 15% volume growth
Goulburn Valley Premium Juice
Volume growth of over 36% in route for Premium
Chilled
June 2007 launch of Goulburn Valley ‘GV to Go’ –
“the juice that brings fruit to life”
Mother 100% all natural energy drink captures
approximately 8% 1 of energy drink category
1. AC Nielsen Australia Scantrack combined database to 15/04/07
20
10

Australia – 2007 second half outlook
Strong start to the second half in July and August
Momentum continues in all major categories
Key success factors
Price realisation of COGS increases and successful execution
of revenue management initiatives
Continued growth in demand for premium product and package
offerings
21
New Zealand & Fiji
Strong improvements in all key metrics
A$m
HY07
HY06
% Chg
Trading revenue
218.7
201.2
8.7%
Revenue per unit case
$6.92
$6.39
8.4%
Volume (million unit cases)
31.6
31.5
0.3%
EBIT
34.4
30.6
12.4%
EBIT margin
15.7%
15.2%
0.5 pts
Capital expenditure / revenue
8.5%
11.3%
2.8 pts
22
11

New Zealand – ARTD manufacture agreement with
Jim Beam
Exclusive agreement with Beam Global
Spirits & Wine New Zealand to
manufacture alcoholic ready-to-drink
beverages including Jim Beam & Cola – the
NZ market leader
Investment by CCA of approximately
NZ$9 million at Auckland plant to facilitate
manufacture
Supply expected to commence November
2007
A further step in the alcohol business
expansion of Pacific Beverages joint
venture with SABMiller
23
New Zealand – review & second half outlook
Strong core brand growth
Coke Zero a standout performer with volume by
16%
Pump and Kiwi Blue volume by 18%
Powerade volume by over 38%
Deep Spring re-launch volume by 33%
L&P 100 th anniversary, delivers volume of 14%
2007 second half outlook
Strong start to second half
Expect double digit growth
Rugby World Cup a bonus for Powerade & Coke
Zero
24
12

Indonesia & PNG
Turnaround continues
A$m
HY07
HY06
% Chg
Trading revenue
218.3
184.4
18.4%
Revenue per unit case
$4.32
$4.15
4.1%
Volume (million unit cases)
50.5
44.4
13.7%
EBIT
3.4
(11.6)
129.3%
EBIT margin
1.6%
(6.3%)
7.9 pts
Capital expenditure / revenue
1.4%
11.2%
(9.8)pts
25
Indonesia – review & second half outlook
Cost of doing business significantly lowered through headcount
reduction and technology implementation
H107 double-digit volume growth driven across all major brands
Fanta Flavours 21%
Sprite 15%
Coca-Cola 12%
Frestea of 29%
2007 Outlook
Expect earnings for H207 at least in line with the very strong H206
performance, assuming stable economy
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13

Solid result given one-off costs of the severe frost and drought in 06
growth EBIT continued and 5.7%
Food & Services Division
A$m
HY07
HY06
% Chg
Trading revenue
280.6
260.1
7.9%
EBIT
38.7
38.3
1.0%
EBIT margin
13.8%
14.7%
(0.9)pts
Capital expenditure / revenue
7.8%
17.0%
(9.2)pts
27
Food & Services - review
SPC Ardmona
Sales revenue increaseof
Growth in most categories including fruit snacks, baked beans &
spaghetti, tomatoes and spreads
Tin-plate driven COGS increases continue to impact
Services
Quirks acquired CCA Australia Beverage’s CDE fleet
Leverage Quirks expertise in CDE fleet management
Achieve improved scale, operating efficiency & procurement
benefits
Focussed management approach has identified
incremental benefits
28
14

South Korea
A$m
HY07
HY06
% Chg
Trading revenue
310.9
366.7
(15.2%)
Revenue per unit case
$5.57
$5.92
(5.9%)
Volume (million unit cases)
55.8 61.9 (9.9%)
EBIT 1 8.8 8.1 8.6%
EBIT margin 1 2.8% 2.2% 0.6 pts
Capital expenditure / revenue
2.3%
1.7%
0.6 pts
1. Before significant items
29
South Korea – Sale process
On 20 August 2007, CCA announced it had entered
into a formal agreement with LG Household &
Healthcare to sell
Final terms agreed
Audited 30 June 2007 EBIT outcome to be agreed
between the parties within the next month
Target completion by late October 2007
Sale proceeds expected to be within previous guidance
of $A520-545 million
Use of proceeds will include debt reduction, accelerated
capex investment and capital management
30
15

Pacific Beverages – JV with SABMiller
Premium beer
Volume by over 50% on prior distribution arrangements
Dedicated licensed channel sales force focus delivering results
Addition of significant sales force of Maxxium spirits portfolio
Very good progress in ARTDs and spirits
180 people servicing over 25,000 licensed customers in Australia
Significant capex on ARTD manufacturing capacity
Small JV EBIT contribution to CCA ahead of expectations
Strong contribution to general Australia overhead
31
JV Relationship – SABMiller & CCA
For Australia and New Zealand, the JV to undertake
All alcohol sales by either party
All alcohol M&A activities
Manufacturing of ARTDs remains with CCA
Sale during H107 of future earnings stream of ARTD
sales (5 year contract) to SABM for $18.7 million
Bought forward income for CCA of approx $15 million
32
16

Launch of Jim Beam & Zero Sugar Cola
First major new product development arising
from the Maxxium relationship – a Global first
Jointly developed by Beam Global Wines &
Spirits and CCA
Targeting growing trend towards low
carbohydrate premium ARTDs
Initial feedback from customers & consumers
on Jim Beam & Zero Sugar Cola very positive
To be launched in Australia in mid-September
2007
33
Coca-Cola Amatil
HY07 Results
Financials
34
17

HY07 Profit & loss
A$m
HY07
HY06
% chg
EBIT (before significant items)
284.5
251.2
13.3%
Net interest expense
(70.4)
(66.2)
6.3%
Profit before tax
214.1
185.0
15.7%
Income tax expense
(53.2)
(39.6)
34.3%
NPAT (before significant items)
160.9
145.4
10.7%
Significant items after tax
(20.0)
(31.1)
(35.7%)
NPAT
140.9
114.3
23.3%
35
HY07 Profit & loss
Effective tax rate of 24.8%
Withholding tax benefit of $16.7 million following a dividend payment by
New Zealand
Operating profits and losses made in South Korea are not tax effected
due to brought forward losses
Adjustment due to under provisions from prior years of $1.8 million
Significant Items of $26.9m in South Korea
$25.0 million ($18.1 million after tax) impairment of carrying value of
South Korean business
$1.9 million (pre and post tax) net costs incurred for extortion attempt
product recall and rehabilitation
36
18

Capital employed
A$m
HY07
FY06
$ chg
Working capital
884.8
797.8
87.0
Property, plant & equipment
1,440.2
1,499.9
(59.7)
IBAs & intangible assets
1,961.0
2,001.3
(40.3)
Deferred tax liability
(281.3)
(327.9)
46.6
Net other assets / (liabilities)
(469.4)
(425.8)
(43.6)
Capital Employed
3,535.3
3,545.3
(10.0)
37
Working capital
Working capital Beverage working capital to
revenue – small increase
primarily due to holding
$885m higher inventories to
$798m
improve service levels
Group working capital
$782m
HY06 FY06 HY07
Working capital / revenue
Beverages
Beverages Food & Services Other
Food & services
HY06
10.4%
65.3%
FY06
10.8%
52.6%
HY07
11.0%
61.1%
Food & services working
capital to revenue –
increase due to the normal
seasonally higher
inventories held by SPCA:
Food & Services on track to
be less than 50% by year
end
38
19

Balance sheet remains strong
Net Debt & Interest Cover
$2,500m
$2,000m
$1,500m
$1,000m
$500m
5.0x
4.0x
3.0x
2.0x
1.0x
Net debt increased by
$31.7 million
Interest cover strong at
4.0x, comfortably meets
CCA’s target range of 3.5
– 4.5x
$0m
2002 2003 2004 2005 2006 HY 07
Net Debt
Interest Cover
0.0x
39
ROCE
Post IFRS
Pre IFRS
ROCE
21.6%
17.5%
16.3% 17.2%
Group ROCE up 0.9 pts
versus FY 2006 due to
increased earnings from
South Korea, Australia and
Indonesia
8.8%
10.2%
Group ROCE up 1.2 pts
versus HY 2006
Further ROCE improvement
expected in 2008 following
completion of automated
warehouse projects
2002 2003 2004 2005 2006 HY 07
40
20

Capital expenditure
Capital Expenditure
5.1% capex / revenue broadly in
line with last year
$120m
$100m
5.0%
4.8%
5.1%
Full year capex expected to be
around 7% of revenue including
2% for infrastructure
$80m
$60m
$40m
$20m
$0m
HY05 HY06 HY07
H2 2007 increases in capex to
be driven by continuing
infrastructure spending on
Sydney and Auckland automated
warehouses, cold drink
equipment and the previously
announced IT systems
integration project
PPE
Other (vehicles, computers etc)
Cold drink equipment
2005 FY capex $300.5M (7.5% NSR)
2006 FY capex $281.0M (6.5% NSR)
41
Free cash flow
A$m
HY07
HY06
$ chg
EBIT
284.5
251.2
33.3
Depreciation & amortisation
93.7
98.2
(4.5)
Cash impact of significant items
(1.9)
(27.1)
25.2
Change in working capital
(87.0)
(53.2)
(33.8)
Net interest
(68.1)
(66.6)
(1.5)
Income tax paid
(70.3)
(68.0)
(2.3)
Other
(7.6)
(13.8)
6.2
Operating cash flow
143.3
120.7
22.6
Capital expenditure
(109.5)
(99.3)
(10.2)
Sale of assets & other
45.8
73.2
(27.4)
Free cash flow
79.6
94.6
(15.0)
42
21

Key commodity inputs still trading 10-50% above 10 year
averages
USc/lb
18.00
16.00
14.00
12.00
10.00
8.00
6.00
NY No.11 Raw Sugar Futures
Sugar USD
Last 10 years Avg (1998-2007)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
USD/Mt
2,900
2,700
2,500
2,300
2,100
1,900
1,700
1,500
1,300
ALUMINIUM USD
Last 10 years Avg (1998-2007)
Aluminium 3 month
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
43
USD/Mt
1,400
1,350
1,300
1,250
1,200
1,150
1,100
1,050
1,000
950
900
850
800
PET Resin - Korea
PET USD
Last 10 y ears Avg (1998-2007)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Impact of rising commodity prices on COGS
Beverages
H1 2007 – COGS per unit case increased as follows:
– as reported 3.5%,
– on a constant currency basis 5.2%, and
– on a constant currency basis and excluding South Korea 6.8%
H2 2007 – CCA expects:
– continuing higher aluminium and PET prices, and
– the rate of increase in COGS per unit case to be less than H1 2007 at
around 6% on a constant currency basis and excluding South Korea
44
22

Capital management
Dividend policy
Gearing
– Maintenance of 70-80% target payout range
75.4% payout in 2006
72.6% payout for interim dividend 2007
– Long-term interest cover target range of 3.5 – 4.5x
– Comfortable with current 4.0x interest cover given current interest
rate outlook
Cash flow
ROCE
– Forecast free cash flow for full year 2007 to be in the order of $200
million
– Expect improvement of at least 1.0pts in 2007
45
Coca-Cola Amatil
2007 Full Year
Outlook
46
23

2007 budget objectives on plan or ahead of plan
NPD focus – energy, flavoured milk, sports drinks, juice
Complete the sale of the South Korean business by Q407
Continue alignment Australia and NZ operating structure and
go-to-market strategies
Scale up presence in licensed channel – upsize sales force with
concentrated portfolio of 22 major non-alcoholic, premium beer
and spirit brands
Complete feasibility study for ‘boutique’ Australian brewery
development by the end of 2007
47
2007 budget objectives on plan or ahead of plan
Premium beer sales to commence in New Zealand in November
Manufacture of ARTDs to commence in new Zealand in
November
Food & Services Division scope & scale expanded in April 2007
Technology and supply chain platform – OAisys (IT) and
automated warehousing
SPCA packaged fruit supply agreements ex China and South
Africa
Establish foundation for creation of back office shared services
across Australia and New Zealand
48
24

2007 CCA Group outlook
Strong start to second half, particularly Australia
Brand portfolio strength continues to pay dividends
In-market execution capability developing into a real competitive
advantage
Commodity input costs
Continue impact in H207 with aluminium costs remaining high
the rate of increase in COGS per unit case to be less than H1 2007
at around 6% on a constant currency basis and excluding South
Korea
Target full recovery of commodity driven cost of goods increases
49
Outlook for H207
Outlook for H207
Important summer trading season in Australia and New Zealand
still to come (22% of annual volume delivered in November &
December)
Targeting high single-digit EBIT growth for second half
Next trading update in November 2007
50
25

Sustainability
CCA achieves world class best practice in
water efficiency
In 2006 1.55 litres of water used per 1.0 FBL
Average in global Coke system is 2.6 litres
CCA operations achieved cumulative water
savings of circa 15% in past 6 years
Goal to become water neutral around three
key targets
Reduce
Recycle
Replenish
51
The material in this presentation is general background information about
Coca-Cola Amatil
and is current at the date of the presentation. It is information given in summary
form and does not purport to be complete.
This presentation is not intended to be relied upon as advice to investors or
potential investors and does not take into account
the investment objectives, financial situation or needs of any particular investor.
It does not amount to advice or any recommendation in relation to
Coca-Cola Amatil shares.
For further information visit
www.ccamatil.com
(Ph) +612 9259 6185
or contact
Paul Irving
Investor Relations Manager
paul.irving@anz.ccamatil.com
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